CHAPTER 7 EXAM REVIEW Exam Part III Chapters

CHAPTER 7 EXAM REVIEW Exam Part III (Chapters 7 and 8)

WHAT ARE? • The 6 parts of a contract? • Answer (Offer and acceptance, genuine assent, consideration, capacity, legality and writing)

WHAT ARE THE 6 PARTS OF A CONTRACT? • Offer and Acceptance (Agreed terms by both offerer and offeree) • Genuine Assent (Entering under your own free will) • Consideration (Both sides gain something fair) • Capacity (Ability to understand a contract and your actions) • Legality (Cannot be illegal) • Writing (Most contract do NOT need to be written to be considered valid)

WHO ARE? • The 2 parties involved in a contract? • Answer (Offeror-Makes offer and offeree- Person offer is made it)

WHAT ARE? • The 3 parts to a valid offer? • Answer (1. Serious Legal, Terms definite and complete and communicated)

WHAT ARE? • The 3 parts to a valid acceptance? • Answer (1. Offeree only accepts, Terms match/ Mirror image rule and communicated)

OFFER AND ACCPTANCE OFFER 1. Offeror must be serious and intend legal offer 2. Terms of offer must be definite and complete 3. Communicated ACCEPTANCE 1. Only the offeree can accept the offer 2. Terms of acceptance match (Mirror image) 3. Communicated

WHY ARE? • Advertisements not usually offers? • Answer (Ads are invitations to an offer, meaning, the customer accepts by coming to store or agreeing online)

WHAT ARE? • 6 ways an offer Terminates? • Answer (Revocation by Offeror, time stated, reasonable time, rejection death/insanity and counteroffer)

6 TERMINATION (ENDING) METHODS • Revoke: To take back the offer • Time State: Offeror can set a time to accept • Reasonable Time: Once reasonable time passes, offer ends (Depends on product/service) • Rejection: Saying no by either side • Death/Insanity: “Before” agreement, ends offer • Counteroffer: Changing the terms of the offer by either side

WHO DEALS WITH? • Business laws? • Answer (UCC, or Uniform Commercial Code)

HOW ARE OFFERS KEPT OPEN IN? • Common law based agreements? • Answer (The Offeree must offer to give an “Option”, which is collateral/Money to buy time to decide)

OPTION EXAMPLE You see someone selling something you want and offer to the person to “Take $100 so I can have some time to get the rest of the money”. You just created an “option”, which is collateral to BUY TIME to make your decision Unfortunately, the offeror can still revoke the offer before you come back with the money unless the $100 is also an agreement you have a contract

CAN? • An offer be worded in a way so silence can be used as acceptance? • Answer (No, not if you are tricking the person)

EFFECTIVE SILENT OFFERS Silent acceptances are only effective if you have an “ongoing relationship” with the party you are contracting with Ex) If a Pepsi driver always stocks my shelves on a Friday, I accept whatever they stock without asking, as I know I need the product to sell on the upcoming busy weekend. .

IS THIS EXAMPLE UNILATERAL OR BILATERAL ACCEPTANCE? • I go to the store and buy some socks and pay for them • Answer (Bilateral, because both parties promise something to form the agreement)

IS THIS EXAMPLE UNILATERAL OR BILATERAL ACCEPTANCE? • Agreeing to complete work on my home when it needs to be done • Answer (Unilateral, because ONE party accepts based on performance)

WHAT IS MORE COMMON? • Bilateral acceptances or unilateral acceptances • Answer (Bilateral, because its more common to have a promise for a promise)

WHEN ARE? • Contract acceptances effective • Answer (Unless stated otherwise, when sent! Offeror can state when they are received, so they get them by a certain date)

ANSWER THIS? • Jerry goes to a jeweler to buy his favorite girl a diamond ring. When gets there, he learns they will not sell Jim the ring because he is 17. What element of a contract is Jim lacking? • Answer (Capacity. . Under 18, means he is a minor and cannot make certain contracts)

ANSWER THIS? • Sarah has been looking for a certain matchbox car to add to her collection and finds one advertised on Craigslist being sold by Tommy, in his home. When she gets to the home, she looks it over, it looks right and she pays Tommy the $400 he is asking for. When Sarah has a friend and fellow collector look at it, she learns the car is actually a fake. Since Sarah didn’t ask Tommy any questions, she attempts to back out of the deal by asking for her money back based on this element of a contract missing • Answer (Either Genuine Assent or Consideration. Genuine assent based on a unilateral mistake, which will likely fail, or consideration based on the trade being fair, which is was not)

ANSWER THIS? • Greg is hungry one day after school and decides to order a sheet pizza and a bucket of chicken wings. When he goes to the pizzeria to pay for them, what type of agreement did Greg create? • Answer (Bilateral- An act for an act)

ANSWER THIS? • Sally goes to a garage sale on morning to find a perfect doll for her granddaughters doll house, but unfortunately, the seller knows its very valuable and is asking $1000 for it. Sally only has $100 on her and asks the seller if she can leave the $100 to buy her time to go to the bank to get the other $900. What did she create? What rights does she have? What law does this fall under? • Answer (Option agreement, she bought time, and it falls under Common Law)

ANSWER THIS? • Jake offers to buy Kens red Honda dirt bike only later to learn, the red one is actually a Kawasaki and Ken is selling the Kawasaki. What element of a contract is missing and why? • Answer (Offer and acceptance, as the terms of the acceptance do not match the terms of the offer (Mirror Image Rule)

ANSWER THIS? • Dante really loves Frontier. Mart Pork Chop Day, but on the day of they sell pork chops, they run out. The cashier says to Dante, “Hey I’ll give you this raincheck so the next time you come in, you get the chops” What was just created? What are Dante’s rights? What type of law? • Answer (Firm offer, good for 3 months or more and UCC Law/ Business regulation)

AND? • Questions on CH 7? • Exam Part III this Friday